Opinion

Redevelop wisely

Sept 07,2018

The government is exploring ways to increase housing in Seoul, as multiple measures to discourage demand failed to rein in runaway apartment prices. Some of the ideas being floated are building in the city’s greenbelt zones and increasing the amount of residences in new commercial and semi-residential buildings.

The Land, Infrastructure and Transport Ministry also asked the Seoul city government to cooperate in easing real estate regulations. It is a relief that the government is finally moving its focus beyond demand-side pressure in the real estate market. Unless the housing supply is increased in hot areas, taxation and other regulatory actions will have a limited effect on housing prices.

The government, however, is barking up the wrong tree with its newly-proposed solutions. It should first lift the cap on large neighborhoods with aging apartments. Redevelopment of old apartment complexes is the best way to increase supplies in the cramped capital area. Except for long-established apartment zones, no other residential locations can draw investment in decent housing. Under three-term Seoul mayor Park Won-soon, large redevelopment projects came to a full stop, fanning the prices of existing complexes.

Developing Seoul’s greenbelt, however, should be the last resort. Most of the vacant land in the zone was already developed for residential purposes by President Lee Myung-bak. What’s left is mostly genuine greenery that should be preserved for future generations. It must not be violated for the sake of housing development. Any construction in the greenbelt must have a social consensus. The city of Seoul, fortunately, announced that it would be prudent with the greenbelt zone and explore other accessible land for housing development.

To keep housing prices stable, more effort must be given to dealing with the liquidity resulting from a prolonged low interest rate environment. This goes beyond real estate. Fluid liquidity is estimated at 1,116 trillion won ($9.9 trillion). The rich must be induced to put their excess money in new industries, which would not only help stabilize real estate prices, but would also boost jobs.